What You Need to Know About Exclusive Buyer Brokerage Agreements

If you’ve been reading the headlines about the latest NAR (National Association of Realtors) settlement, some big changes will be coming to the real estate industry in August 2024.

Of these changes, the biggest one for consumers will be that if a consumer wants to be represented by a Realtor, their Realtor will no longer be legally allowed to show them a home without entering into a written agreement called an “Exclusive Buyer Brokerage Agreement.”

What is an Exclusive Buyer Brokerage Agreement?

Basically, this is a contract between a real estate Broker and a home buyer that says the Broker (Realtor) agrees to represent the buyer’s interests and that the buyer is committing to using that broker to buy a home. These written agreements must be signed by both the Realtor and the home buyer before any home showings or property tours can legally happen. This is a nationwide mandate, not just one affecting the Tampa Bay area of Florida.

This contract will outline the terms and conditions of the working partnership between a home buyer and their Realtor. Your Realtor will be due a commission at closing for the services provided per the agreement. The key element of these agreements is that buyers will want to commit to just 1 Realtor, as signing multiple agreements with several Realtors could put buyers in a position where several Realtors could require compensation once a home is purchased. Some agreements will also require an upfront retainer fee paid by the buyer as well. If the buyer purchases a home and uses another Realtor while the agreement is in effect, the buyer will still owe the original Realtor listed on the signed buyer brokerage agreement a commission.

In terms of commission, the Realtor will be due a commission at closing (the same as it’s always customarily happened in Florida). However, while the commission is negotiable, the buyer will be legally required to compensate the Realtor at closing, unless the seller is offering commission to a buyer’s agent. In some cases, a seller may offer a smaller commission amount than what the buyer and the Realtor agreed on in the Exclusive Brokerage Agreement. In that case, the buyer would be required to pay the difference in the amount the seller is offering and what’s listed in the Exclusive Brokerage Agreement.

The brokerage agreements will have a set duration of time (for our brokerage, the minimum amount of time is 6 months) they are enforceable. They will also clearly state if there is a fee to cancel or any upfront retainers required. As a reminder, some buyers can take a year or more to find a home. These agreements ensure your Realtor gets compensated for the time they spend working for you to find the right home, offering advice in terms of how the buying process works, managing contract deadlines, negotiating on your behalf, coordinating closing details, managing repairs, concessions, and more.

There will be 2 versions of agreements available to buyers from our team: Single-agent with consent to transition to a transaction broker (the transition is required in Florida if Realtor’s on the selling and listing side of a transaction work for the same brokerage). There is also a "no brokerage relationship" form (meaning the buyer is saying they will represent themselves).

In the case a buyer signs a “no brokerage relationship” agreement, the Realtor will not be representing the buyer in any capacity. The Realtor cannot provide or advise on purchase offers or contracts. This means the Realtor cannot legally tell a buyer how to fill in a contract, give them any contract documents to fill out, or offer any real estate related opinions or professional advice to a buyer. This is not a method we recommend, as buyers who are not trained real estate professionals will be responsible for understanding and managing contract terms, due diligence dates, scheduling inspections, coordinating closing timelines, and more. Buyers can retain an attorney for these services as well, often becoming more costly than paying a Realtor for the same services.

Other Things to Know About Exclusive Brokerage Agreements

• The Realtor may not receive any more commission than agreed to in the signed agreement.

• Currently, 70%-80% of all home sellers in the Tampa Bay area are still offering to pay a buyer’s agent commission at closing, meaning the buyer won’t have to pay the total amount, or possibly may pay nothing at all to their Realtor during a purchase transaction.

• As of August 6th, 2024, offers of compensation to Realtors will no longer be allowed in the MLS or on any public marketing. Prior to writing an offer, your Realtor can call the listing agent and find out if the seller is offering any compensation to the buyer's agent to help defray buyer closing costs. 

• If no compensation is being offered to the buyer’s Realtor by the seller, it’s still possible for a buyer to ask for a concession (a.k.a closing cost credit) for their Realtor’s fee at the time the purchase contract or offer is written. The offer can also be contingent upon a seller paying the buyer's agent commission, on the buyer's behalf. Some lenders will also be able to finance in the Realtor commission as well. **This is something you’d want to discuss with your lender in advance of touring any homes.**

**In coming days, if you’ve been shopping for a home with a Realtor and don’t have an brokerage agreement signed, your Realtor will likely be asking you to sign one to legally be able to continue representing you in your home search. Not sure what the agreement means? Schedule an appointment to meet with your Realtor to review all the terms in advance of signing it or touring any homes. An experienced Realtor should be able to easily explain what is being signed, commission rates, and what their services will include.

Summary

If you’re thinking about buying a home and would like more information on the types of services our team of agents provides to buyers, be sure to give us a call at (727) 400-3315 or message us HERE.

As always, we are happy to provided information to you on all aspects of the home buying and selling processes.